CNBC host Jim Cramer said Friday’s drop in oil prices helped revive the U.S. stock market, but warned that investor sentiment could shift again next week when the Federal Reserve meets. In his view, the decline in crude was the main reason markets managed to stabilize at the end of the week.
Major indexes rebounded on Friday, recovering part of the losses accumulated over four straight down sessions. The Dow Jones Industrial Average rose 509 points, or 0.98%, while the S&P 500 gained 0.86% and the Nasdaq Composite added 0.96%. Technology shares were among the leaders after upbeat updates from Adobe and Oracle released after Thursday’s close.
Cramer said those developments brought fresh interest back to beaten-down enterprise software and data center names. He pointed to Dell, Vertiv, Cisco, Marvell, GE Vernova and Hewlett Packard Enterprise as possible beneficiaries.
With only a limited number of major earnings reports due next week, Cramer said market direction will depend largely on oil and interest rates. The first major variable, he said, is the war in Iran. Any progress toward peace could send oil sharply lower, easing inflation pressure and reducing stress on interest rates. But renewed fighting could quickly erase Friday’s relief.
He warned that if Iran were to attack a carrier group with drone swarms, oil would spike, interest rates would jump and the stock market would come under heavy pressure.
Investors will also be watching Salesforce’s annual Dreamforce conference, which begins Monday in San Francisco. Cramer said he will interview Salesforce CEO Marc Benioff on Wednesday and speak with other executives at the event during the week.
The biggest scheduled event comes on Wednesday, when the Federal Reserve’s Open Market Committee meets. Cramer said the consensus view is that policymakers will raise rates to contain persistent inflation. He will be watching closely how longer-dated U.S. Treasury yields react to that decision.
According to Cramer, the 30-year Treasury yield could even decline after a rate hike if bond investors see Fed Chairman Kevin Warsh’s move as a sign of greater discipline on inflation. Even so, he argued that another increase would make an already difficult investing backdrop even tougher, and he urged investors to be selective and avoid using margin.
The effect of higher rates will also be in focus when Lennar reports after Wednesday’s close. Cramer said stubbornly high mortgage rates are still weighing on housing demand because homeowners locked into low existing mortgage rates remain reluctant to move.
On Thursday, Brinker International and Intuit, the parent of TurboTax, will hold analyst meetings. Cramer said he remains bullish on Brinker International, the parent of Chili’s, and pushed back against concerns that AI could disrupt Intuit’s business. As support for that view, he pointed to the recent strength in Salesforce and ServiceNow shares.
